Appendix 4: 2015 – 2017 Reserve, Reserve Fund Report and Continuity Schedule Reserves and Reserve Funds are established by City By-law or through Provincial legislation and can be used in the development of the capital and operating budgets. 1. Reserves are established for a pre-determined use and are applied at the discretion of Council for that purpose. 2. Reserve Funds are restricted by statute or by Council discretion and must be segregated from general revenues. The City has 114 reserve and reserve funds that collectively have an uncommitted balance of $96.1M as at December 31, 2014. Table 1 illustrates the historical trend in the City’s reserve and reserve fund balance and provides a ten year projection based on the 2015 capital budget and forecast. Detailed forecasts for each are attached at the end of this report in Appendix A. Table 1: Reserve and Reserve Fund Balances Note: The decline in 2014 reflects the shifting of all prior year commitments into the current year. In 2015, any unspent budget from 2014 or earlier will be applied against the 2015 balance because it is assumed that prior year budgets will be spent in the current year. 1. Reserves a. Reserves are an allocation from net revenue at the discretion of council, after the provision for all known expenditures. This allocation is made as part of an overall (100.) (50.) . 50. 100. 150. 200. 250. 300. 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 $ Millions Year Reserve and Reserve Fund Balances Obligatory Reserve Funds Discretionary Reserve Funds Reserves Reserve and Reserve Fund Total 4 - 1
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Appendix 4: 2015 – 2017 Reserve, Reserve Fund Report and Continuity Schedule
Reserves and Reserve Funds are established by City By-law or through Provincial legislation and can be
used in the development of the capital and operating budgets.
1. Reserves are established for a pre-determined use and are applied at the discretion of Council
for that purpose.
2. Reserve Funds are restricted by statute or by Council discretion and must be segregated from
general revenues.
The City has 114 reserve and reserve funds that collectively have an uncommitted balance of $96.1M as
at December 31, 2014. Table 1 illustrates the historical trend in the City’s reserve and reserve fund
balance and provides a ten year projection based on the 2015 capital budget and forecast. Detailed
forecasts for each are attached at the end of this report in Appendix A.
Table 1: Reserve and Reserve Fund Balances
Note: The decline in 2014 reflects the shifting of all prior year commitments into the current year. In
2015, any unspent budget from 2014 or earlier will be applied against the 2015 balance because it is
assumed that prior year budgets will be spent in the current year.
1. Reserves
a. Reserves are an allocation from net revenue at the discretion of council, after the
provision for all known expenditures. This allocation is made as part of an overall
(100.)
(50.)
.
50.
100.
150.
200.
250.
300.
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
20
18
20
19
20
20
20
21
20
22
20
23
20
24
$ M
illio
ns
Year
Reserve and Reserve Fund Balances
Obligatory Reserve Funds
Discretionary Reserve Funds
Reserves
Reserve and Reserve Fund Total
4 - 1
strategy for funding programs or projects that are set out in annual budgets or budget
forecasts, and is authorized under the provisions set out in the Municipal Act. It has no
reference to any specific asset and does not require segregation as in the case of a
reserve fund. A reserve may be established for a predetermined purpose and applied
for that purpose at the discretion of council.
As at December 31, 2014, the City had available the following reserves for operating and capital
needs:
i) Staffing: Staffing reserves are used to manage fluctuations in benefits payable, carry
liabilities for sick time payable, maintain funds for severances, retiree benefits, union
negotiations and job evaluation changes. These funds are not used in the development
of the capital budget. The balance of these reserves total $14.2M as at December 31,
2014.
ii) Miscellaneous Reserves: Miscellaneous reserves are funded by approved transfers from
operating or operating surplus allocations and are used to support a predetermined
purpose at the discretion of council. The City has 10 miscellaneous reserves that pertain
Affordable Housing (119) Approved transfers from operating that are used to support affordable housing projects within the City
173
Strategic Initiatives (179) To provide funds to supported strategic initiatives as identified in the City’s Corporate Strategic Plan. Funds were transferred in through a one-time contribution as a result of a review of several of the City’s operating contingency reserves
676
Tax Rate Stabilization (180) This reserve accumulates operating surpluses that can be used in the budget process to mitigate the impact of large tax levy increases, or to fund year end deficits
1,994
Insurance (184) Surplus amounts from the annual insurance budget are transferred to the insurance reserve to be used for insurance payouts and to lower premiums
1,641
4 - 2
Legal (193) Approved transfers from operating are used to pay fees and payments resulting from Court/OMB settlements and expenses relating to retaining outside experts and consultants that assist the City in legal proceedings
194
Downtown Improvement (194) Budgeted transfers from operating are used to offer incentives for facade improvements in the downtown
21
Election Costs (195) This reserve is used to accumulate annual operating budget transfers to fund municipal election costs that are needed every four years
202
Operating Contingency (198) To provide funds to offset the impact of unplanned events related to volatile expenditures such as energy and fuel costs and winter control. Funds were transferred in 2010 and 2011 and no further contributions have been made since that time
902
Building Operations Maintenance (206)
This reserve is funded through annual operating budget transfers and used to pay for unexpected and emergency repairs and maintenance
62
IT Licence (210) This reserve is funded through annual operating budget transfers and used to fund the purchase of MS Office licence renewals.
608
Total $6,473
iii) Tax Increment Based Grant Reserves (Brownfield 122, Heritage 192 and Downtown
358): As recommended in Committee Report FIN-12-01, the City’s Tax Increment Based
Grant (TIBG) program awards annual grants to eligible redevelopments over a maximum
ten year period. The funding for the program is transferred in from the operating
budget. The current balance of the three reserves is $1.69M and represents the grant
payments owing in the short term.
4 - 3
iv) Non-Tax Supported: Water, Wastewater and the POA each have a reserve that is used
to stabilize rate increases or fund one time or unforeseen expenses. The balance in
these accounts total $5.08M.
2. Reserve Funds
Reserve funds differ from reserves in that reserve fund assets are segregated from general revenues and
restricted in use to meet the purpose of the reserve fund. There are two types of reserve funds:
Obligatory reserve funds and Discretionary reserve funds.
i) Obligatory Reserve Funds
An Obligatory reserve fund is created when a provincial statute requires that revenue received for
special purposes be segregated from the general revenues of the municipality. Obligatory reserve funds
are to be used solely for the purpose prescribed for them by statute. The City has the following 20
Obligatory Reserve Funds:
1. Parkland Dedication (300): This reserve fund has been set up as per Provincial legislation
(subsection 42 (14) and (15) of the Planning Act) for the purpose of requiring the payment of
cash-in-lieu of conveyance of land for a park or other public recreation purpose. The balance in
this reserve fund is $1.83M
2. Downtown Parkland Dedication (301): This reserve fund has been set up as per Provincial
legislation (subsection 42 (14) and (15) of the Planning Act) for the purpose of requiring the
payment of cash-in-lieu of conveyance of land for a park or other public recreation purpose
specifically from development in the downtown. The balance in this reserve is $0.59M.
3. Federal Gas Tax (343): Funds received from the Federal government through the “New Deal for
Cities and Communities” program to support environmentally sustainable municipal
infrastructure projects that can demonstrate progress towards clean air, clean water, and
reduced greenhouse gas. The balance in this reserve fund is $2.36M
4. Provincial Gas Tax (342): Monies received from the Provincial government that are to be used
to support increased public transportation ridership and investments in the renewal and
expansion of public transportation. The balance in this reserve at December 31, 2014 is $1.24M.
5. Building Services Stabilization (188) allows a municipality to establish a reserve funds which
may only be used to help stabilize slow years in terms of building activity and permit revenue.
The balance as at December 31, 2014 is $2.05M.
6. Development Charges (15 individual reserve funds)
As set out under Subsection 16 (1) of the Development Charges Act, Development Charge (DC)
reserve funds are comprised of development charges received at building permit or at
subdivision agreement. These reserve funds are restricted by the Province’s development
charge legislation and the Development Charge Act that dictates these funds are to be used for
growth related infrastructure. The following table identifies the balance in each of the 14 DC
reserve funds as at December 31, 2014:
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Service Area Reserve Fund
Uncommitted Reserve Fund
Balance (thousands$)
Water (311) $12,319
Wastewater (312) (675)
Stormwater (313) (2,337)
Services Related to a Highway (314) (558)
Fire (315) (935)
Library (316) (82)
Transit (317) (623)
Admin (318) (382)
Recreation (319) 8,697
Parks (320) 621
Parking (323) 2,193
Police (324) (1,049)
Ambulance (325) (1,359)
POA (326) (106)
Health (327) (255)
Total $15,469
Note: A negative balance can be the result of one of two situations: the reserve fund is over-committed
(i.e. if everything in the approved capital budget is spent in the current year, there will be insufficient
funds available to cover the expenditures) or an actual over-expenditure has occurred (as is the case for
stormwater, fire, police, transit, ambulance and the POA categories).
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ii) Discretionary Reserve Funds
Discretionary reserve funds are created under Section 417 of the Municipal Act, 2001 (S.O. 2001, c.25).
Discretionary reserve funds are established whenever a municipal Council wishes to earmark revenues
to finance a future expenditure for which it has the authority to spend money, and to set aside a certain
portion of any year’s revenues so that the funds are available as required. Revenues set aside for road
widening and for acquisition of fixed assets are examples of discretionary reserve funds.
There are two major advantages to discretionary reserve funds:
a) Similar to a reserve, they help stabilize the general municipal tax levy. In a year when a
large amount of revenue is required to finance capital projects, a previously established
discretionary reserve fund can enable a municipality to spend money without affecting the
general municipal levy or the need to issue debentures
b) The assets of the reserve fund can be invested to earn income, thus helping to reduce the
amount of money to be set aside.
As at December 31, 2014, the balances in the following discretionary reserve funds are as follows:
1. Equipment Replacement: established to provide future budget contributions for capital
equipment replacement.
Equipment Replacement Reserve Fund
Uncommitted Reserve Fund Balance (thousands$)
Fire (111) $142
Transit (113) 197
Police (115) 14
Waste management (116)
264
Computer (118) (20)
Play Equipment (121)
4
Operations Fleet (124)
2,405
Total $3,005
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2. City Strategies Reserve Funds: City resources that are earmarked for a specific purpose or to
finance a future expenditure. The City’s Strategic reserve funds are as follows:
Reserve Fund Description
Uncommitted balance in the Reserve Fund (thousands$)
Capital Tax (150) Monies received from the operating budget or the sale of surplus lands and used as a corporate capital contingency
$2,617
DC Exemptions (156) Funds received from tax supported sources that are to be transferred to DC reserve funds to compensate for DC exemptions
2,347
Accessibility Capital (159)
Funds transferred from operating budget to support capital projects that improve accessibility
12
Roads Infrastructure (160)
Monies transferred in from operating to fund road infrastructure
582
Building Life Cycle (190)
Monies transferred in from the operating budget and used to fund capital life cycle investments
(3)
Asset Renewal (352) Funds received from the disposition of the City’s interest in Guelph Hydro that are used to finance the renovation and replacement of existing City structures and facilities
7,491
Total $13,046
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3. Miscellaneous Discretionary Reserve Funds: Reserve funds created under the Municipal Act
when Council wishes to earmark revenues such as donations, grants, sale of land proceeds and
special fees to finance a future expenditure for which it has the authority to spend money, and
to set aside a certain portion of any year’s revenues so that the funds are available as required.
Reserve Fund Description Uncommitted Reserve Fund Balance (thousands$)
Museum related (135,136,137)
Monies received from private donations or bequests that must be used for approved museum related expenditures
$219
Library Bequests (138) Funds received from private donations used for approved library expenditures
243
Landfill Compensation (155)
Allocation from tipping fees used to compensate area residents for prolonged landfill operation
71
Sleeman Centre (162,189) Revenues from naming rights agreement and ticket surcharge used to fund approved facility related expenditures
35
Road Widening (331) Funds transferred in from the sale of road allowances and the rental of road allowance property and used to fund road widening costs and land purchases for road widening projects
853
Industrial Land (332) Revenues received from the sale of city-owned industrial or commercial land used to fund servicing costs, related debt payments and new land purchases
3,052
River Run (340) Funds collected from ticket surcharge used to pay for River Run capital repairs and maintenance
113
Greenhouse Gas (352) Monies from grants (Green Power Action & Greening Canada) used to fund environmental initiatives
110
Total $4,696
4 - 8
4. Departmental Capital Reserve Funds are used to accumulate approved transfers from operating
for the purpose of funding initiatives that support infrastructure life cycle or expansion.
Reserve Fund Uncommitted Reserve Fund Balance (thousands$)
Parking (151) $19
Library (157) 757
Police (158) 29
Roads (164) 174
Stormwater (165) 149
Park Planning (166) (243)
Policy Planning(167) 70
Operations Capital (169) 160
Culture (171) 93
Transit (172) (87)
Information Technology (176) 10
Waste Management (186) 3
POA Relocation (120) 946
Water Capital (152) 10,177
Wastewater Capital (153) 10,655
Water DC Exemptions (353) 210
Wastewater DC Exemptions (354)
1,207
Total $24,329
4 - 9
Appendix A: Reserve and Reserve Fund Forecasts
Staffing Reserves Total
Closing Balance December 31, 2014 14,241,855
2015
Transfers Out (957,927)
Debt Charges - PrincipalDebt Charges - InterestTransfers In 1,357,482
Debt IssueInterest EarnedClosing Balance December 31, 2015 14,641,410